UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

ABERCROMBIE & FITCH CO., 

Plaintiff,

 Civil Action No. 2:11-cv-1114

v. Judge George C. Smith

 Magistrate Judge Elizabeth P. Deavers

ACE EUROPEAN GROUP, LIMITED,

 

Defendant.

OPINION AND ORDER

Plaintiff, Abercrombie & Fitch Company (“Abercrombie”), brings this insurance

coverage dispute against Defendant, Ace European Group, Limited (“Ace”). This Court has

jurisdiction over this action pursuant to 28 U.S.C. § 1332, the federal statute governing diversity

jurisdiction. The matter is before the Court for consideration of Abercrombie’s Motion to File a

Supplemental Complaint (ECF No. 25), Ace’s Response (ECF No. 26), Abercrombie’s Reply

(ECF No. 31), Ace’s Motion to Strike and Leave to File a Sur-Reply (ECF No. 33),

Abercrombie’s Memorandum in Opposition (ECF No. 34), and Ace’s Reply (ECF No. 36).

Abercrombie seeks leave to supplement its complaint to add new claims arising from a newlyfiled case against Abercrombie. Ace opposes the motion and seeks to strike portions of

Abercrombie’s Reply or be granted leave to file a sur-reply. For the reasons that follow, Ace’s

Motion to Strike or File a Sur-Reply is DENIED, and Abercrombie’s Motion to File a

Supplemental Complaint is GRANTED.

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I.

This diversity action arises out of an insurance coverage dispute between Ace and

Abercrombie. Abercrombie is a Delaware corporation with its principal place of business in

New Albany, Ohio. Ace is a foreign company domiciled in the United Kingdom and registered

to sell surplus lines insurance policies in Ohio. In exchange for premiums, Ace issued

Abercrombie the Safeonline Advertisers and Internet Liability Policy (“Policy”). Hollister Co.

(“Hollister”) is a company affiliated with Abercrombie and is a named insured under the Policy.

In 2009, Abercrombie conducted a nationwide Christmas gift card promotion, offering a

twenty-five dollar gift card to consumers who purchased a designated amount of merchandise. 

According to Abercrombie, the promotional gift cards expired and had their balance voided out

on January 30, 2010. Some of the gift cards issued in connection with the promotion, however,

had the words “no expiration date” while others had no printed information regarding an

expiration. (Compl. ¶ 11, ECF No. 4.) 

In the summer of 2010, consumers brought two class-action complaints against

Abercrombie arising from their inability to utilize the promotional gift cards after January 30,

2010. The first-filed lawsuit, styled GS Tiffany Boundas and Dorothy Stojka v. Abercrombie,

Case Number 10-cv-4866 (“Boundas Action”), was filed in a state court in Illinois on June 8,

2010, which was subsequently removed to the Northern District of Illinois. The second-filed

lawsuit, styled Kerry White v. Abercrombie & Fitch, Hollister, and The Limited, Case Number

BC 444368 (“White Action”), was filed in the Superior Court of the State of California for the

County of Los Angeles Central District. 

During the Policy period, Abercrombie sought coverage from ACE under the Policy for

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the Boundas and White Actions. Based upon its review of the allegations set forth in the

Boundas and White complaints, Ace denied coverage. On November 28, 2011, Abercrombie

filed suit against Ace in the Court of Common Pleas for Franklin County, Ohio. Ace

subsequently removed the action to this Court. Abercrombie seeks declaratory relief regarding

the terms of the policy and asserts state-law breach of contract and bad faith claims arising out of

Ace’s denial of coverage for the Boundas and White Actions.

On December 14, 2011, a third action arising from Abercrombie’s gift card promotion

was filed by Beth Seaver against Abercrombie in the Court of Common Pleas for Cuyahoga

County, Ohio (“Seaver Action”). On January 5, 2012, Abercrombie tendered the Seaver Action

to Ace for coverage. Ace did not respond. 

Abercrombie now seeks leave to supplement its Complaint in order to add its claims

against Ace arising from Ace’s refusal to provide coverage for the Seaver Action. In support of

its Motion, Abercrombie asserts that leave is proper under Federal Rule of Civil Procedure 15(d). 

Ace opposes Abercrombie’s Motion, citing futility, prejudice, and undue delay. In its Reply,

Abercrombie responds to each of Ace’s arguments. In addressing Ace’s futility argument, in

addition to its reliance on the Policy language and case law, Abercrombie attaches an affidavit

from the individual who serves as its liaison to its insurers, Nancy Sparrow, in which she

recounted communications between herself and an insurance broker regarding coverage for the

Seaver Action. Ace moves the Court to strike the affidavit as well as the other responsive

arguments Abercrombie advanced in its Reply or, in the alternative, seeks leave to file a surreply. (ECF No. 33.) Ace’s Motion to Strike is fully briefed. (ECF Nos. 33, 34, and 36.) 

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 II.

Abercrombie has moved to supplement its pleadings pursuant to Federal Rule of Civil

Procedure 15(d). Motions to supplement are evaluated under the same standard as motions to

amend under Rule 15(a). Spies v. Voinovich, 48 F. App’x 520, 527 (6th Cir. 2002) (citations

omitted); 21 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1504

(3d ed. 2012). Under Rule 15(a)(2), the Court should give leave for a party to amend its

pleading “when justice so requires.” Fed. R. Civ. P. 15(a)(2). Accordingly, when a party

decides “to advance a new claim as a result of [] discovery,” Rule 15(a) provides for “liberal

amendment to the complaint.” Tucker v. Union of Needletrades, Indus. & Textile Emp., 407

F.3d 784, 788 (6th Cir. 2005). “Nevertheless, leave to amend ‘should be denied if the

amendment is brought in bad faith, for dilatory purposes, results in undue delay or prejudice to

the opposing party, or would be futile.’” Carson v. U.S. Office of Special Counsel, 633 F.3d 487,

495 (6th Cir. 2011) (quoting Crawford v. Roane, 53 F.3d 750, 753 (6th Cir. 1995)) (emphasis

added). A court may deny a motion for leave to amend for futility if the amendment could not

withstand a motion to dismiss. Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505,

512 (6th Cir. 2010); Midkiff v. Adams Cnty. Reg’l Water Dist., 409 F.3d 758, 767 (6th Cir.

2005).

To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the

Federal Rules of Civil Procedure, a plaintiff must satisfy the basic federal pleading requirements

set forth in Federal Rule of Civil Procedure 8(a). Under Federal Rule of Civil Procedure 8(a)(2),

a complaint must contain a “short and plain statement of the claim showing that the pleader is

entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although this pleading standard does not require

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“‘detailed factual allegations,’ . . . [a] pleading that offers ‘labels and conclusions’ or ‘a

formulaic recitation of the elements of a cause of action,’” is insufficient. Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 

Further, a complaint will not “suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual

enhancement.’” Id. (quoting Twombly, 550 U.S. at 557). Instead, to survive a motion to dismiss

for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, “a

complaint must contain sufficient factual matter . . . to ‘state a claim to relief that is plausible on

its face.’” Id. (quoting Twombly, 550 U.S. at 570). Facial plausibility is established “when the

plaintiff pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. In considering whether this facial

plausibility standard is met, a Court must construe the complaint in the light most favorable to

the non-moving party, accept all factual allegations as true, and make reasonable inferences in

favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross &

Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citations omitted). The Court is not required,

however, to accept as true mere legal conclusions unsupported by factual allegations. Iqbal, 556

U.S. at 678 (citing Twombly, 550 U.S. at 555).

III.

A. Ace’s Motion to Strike or to File a Sur-Reply

As a threshold matter, Ace’s Motion to Strike New Arguments and Factually Incorrect

Statements from Plaintiff’s Reply Brief and Affidavit Attached to Same Or, in the Alternative,

for Leave to File a Sur-Reply is DENIED. (ECF No. 33.) In its Motion, Ace takes issue with

Abercrombie’s reference to representations made by a third party concerning the Policy’s

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coverage of the Seavers Action. Ace also asserts that the Court should strike Abercrombie’s

argument that the Policy is a “claims made” policy. Finally, Ace posits that the Court should

strike Abercrombie’s argument concerning Ace’s failure to issue a coverage letter regarding the

Seaver Action. According to Ace, the Court must strike these arguments because Abercrombie

advanced them for the first time in its Reply. Alternatively, Ace seeks leave to file a sur-reply. 

As set forth more fully below, the Court has relied only on the plain, unambiguous

language of the Policy to resolve Abercrombie’s Motion to Supplement. It is, therefore,

unnecessary to resolve the parties’ arguments considering the admissibility or relevance of Ms.

Sparrow’s affidavit at this juncture. For this same reason, it is unnecessary to consider the

import of Ace’s delay in issuing a coverage letter or Abercrombie’s characterization of the

Policy in its Reply Memorandum. 

Likewise, Ace cannot demonstrate that good cause exists to justify filing a sur-reply. In

its Memorandum in Opposition to Abercrombie’s Motion to Supplement, Ace highlights Policy

language that it asserts demonstrates the futility of Abercrombie’s proposed Supplemental

Complaint. (ECF No. 26.) Abercrombie, in its Reply, simply responds to Ace’s arguments,

highlighting Policy language that it maintains requires the opposite result. (ECF No. 31.) The

Court is well-equipped to review the Policy language and to evaluate whether or not

Abercrombie or Ace has mischaracterized the nature of the Policy. See Bishop v. Children’s Ctr.

for Dev. Enrichment, No. 2:08-cv-766, 2011 WL 5506105, at *2 (S.D. Ohio Nov. 10, 2011)

(“The Court is in the business of determining whether the litigants before it appropriately relate

the facts, the other parties’ arguments, and the propositions that are set forth in case law or

whether the litigants mischaracterize the facts, arguments, and propositions.”) Consequently, the

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Court’s denial of Ace’s request to file a sur-reply does not prejudice Ace. 

B. Abercrombie’s Motion For Leave to Supplement its Complaint

Ace first submits that the court must deny Abercrombie’s proposed supplemental

complaint on futility grounds because it relies on conclusory statements to establish its cause of

action and also because “the unambiguous terms and conditions of the Policy . . . demonstrate

that Abercrombie reported the [Seaver Action] to Ace well after the applicable Policy Period

expired.” (Ace’s Mem. in Opp. 3–4, ECF No. 26.) Ace further posits that it would be unduly

prejudiced should this Court allow Abercrombie’s supplemental pleading. Finally, Ace cites

undue delay as a proper basis for denial. The Court addresses each of Ace’s arguments in turn. 

1. Futility 

The Court rejects Ace’s contention that Abercrombie’s proposed Supplemental

Complaint would not survive a motion to dismiss because it consists only of threadbare recitals

of the elements and conclusory allegations. Reading Abercrombie’s Supplemental Complaint in

connection with its original Complaint, the Court concludes that Abercrombie has sufficiently

pled facts in support of each element of its breach of contract claim. “There are four main

elements to a breach of contract claim: (a) the existence of a contract; (b) performance by the

plaintiff; (c) breach by the defendant; and (d) damage or loss to the plaintiff.” Thomas v. Publrs.

Clearing House, 29 F. App’x 319, 322 (6th Cir. 2002) (citing Donor v. Snapp, 98 Ohio App. 3d

597, 649 (Ohio Ct. App. 1994)). Here, Abercrombie identifies and attaches the Policy at issue,

further alleging that it is valid and enforceable. It pleads that “[a]ny conditions precedent to

coverage under the Policy have been satisfied . . . .” (Suppl. Compl. ¶ 17, ECF No. 25-1.) 

Abercrombie identifies the particular provision of the Policy that it alleges Ace has breached:

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“ACE promised to pay claims expenses incurred by Abercrombie in connection with ‘civil

actions for consumer fraud.’ . . . To date, ACE has failed to pay Abercrombie’s claims

expenses associated with the Seaver Lawsuit . . . .” (Id. at ¶ 18; Compl. ¶¶ 5 and 32, ECF No. 4.) 

Finally, Abercrombie alleges that Ace’s breach caused it to suffer damages. This is enough. 

Notably, Ace fails to identify which elements of a breach of contract claim that it believes

Abercrombie fails to sufficiently plead. 

The Court likewise rejects Ace’s second futility argument, that the unambiguous Policy

language demonstrates that the Policy’s reporting requirements preclude coverage for the Seaver

Action. “In Ohio, insurance policies are generally interpreted by applying rules of contract law. 

If the terms of a policy are clear and unambiguous, the interpretation of the contract is a matter

of law.” Spanger v. Wenninger, No. 1:06-cv-229, 2008 WL 4218580, at *4 (S.D. Ohio Sept. 9,

2008) (citing Burris v. Grange Mut. Cos., 46 Ohio St.3d 84, 88 (1989)). In cases where the

terms of an insurance contract are in dispute, Ohio courts apply a “reasonable construction of the

contract in conformity with the intention of the parties as gathered from the ordinary and

commonly understood meaning of the language employed.” King v. Nationwide Ins. Co., 35

Ohio St. 3d 208, 211 (1988) (internal quotation marks and citation omitted). Put simply, the

Court must “look for the plain and ordinary meaning of the language used in the policy unless

another meaning is clearly apparent from the contents of the policy.” Westfield Ins. Co. v.

Galatis, 100 Ohio St.3d 216, 219 (2003) (citation omitted). Policy interpretations tend to favor

the insured, as “any reasonable interpretation of an insurance policy that results in coverage for

the insured must be adopted.” Univ. of Cincinnati v. Arkwright Mut. Ins. Co., 51 F.3d 1277,

1280 (6th Cir. 1995) (citation omitted). 

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In support of its argument, Ace quotes the following language from the Policy’s

Introductory Clause: 

THIS IS A CLAIMS FIRST MADE AND NOTIFIED POLICY. THIS POLICY IS

LIMITED TO LIABILITY FOR ONLY THOSE CLAIMS THAT ARE FIRST

MADE AND NOTIFIED TO US DURING THE POLICY PERIOD OR ANY

EXTENDED REPORTING PERIOD . . . .

(Ace’s Mem. in Opp. 1–2, ECF No. 26 (citing Policy at 5, ECF No. 25-2).) Noting that the

Policy Period is from September 1, 2009, to September 1, 2010, and that Abercrombie did not

tender the Seaver Action until January 5, 2012, Ace posits that the foregoing Policy language

renders Abercrombie’s proposed claims relating to the Seaver Action futile. 

Conspicuously absent from Ace’s analysis is any mention or discussion concerning the

Policy’s definition of “Claim” or the Policy’s “Notice/Claims Reporting Provisions,” both of

which unambiguously require the Court to reject Ace’s interpretation of the Policy. (See Policy

7, 13–14.) The Policy defines “Claim” as follows: 

Claim means

(a) a civil proceeding for damages commenced by the filing of a

complaint or similar pleading . . . .

All claims arising out of: 

(a) the same covered event . . . shall be considered a single claim

regardless of the number of claims, claimants, defendants, or causes

or action. The date when any such claim is made will be the date that

the first claim is made.

(Policy 7, ECF No. 25-2.) Ace does not dispute that the Boundas and White Actions were

“made and notified” during the policy period. Nor does it dispute that the Seaver Action arises

from the same event as the Boundas and White Actions, namely, the gift card promotion. Thus,

the Policy’s definition of “Claim” requires that the Court interpret the Seaver, Boundas, and

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White Actions as a “single claim,” which was made when the first of these actions was initiated

and notified when Abercrombie tendered the Boundas and White Actions. (Id.) This

interpretation of the timing of the notification of the Seaver Action is consistent with the Policy’s

“Notice/Claims Report Provisions.” This section of the Policy provides, in relevant part, as

follows: 

2. If during the policy period you first become aware of any circumstance that

could reasonably be the basis for a claim you may provide written notice to

us through persons named in Item 9 of the Schedule during the policy period

of; 

i. The specific details that could reasonably be the basis for a claim; 

ii. The injury or damage which may result or has resulted from the

circumstances; and 

iii. The facts by which you first became aware of this. 

Any subsequent claim arising out of such circumstance made against you

which is the subject of the written notice will be deemed to have been made

at the time written notice complying with the above requirements was first

given to us.

3. A claim shall be considered to be notified to us when written notice is first

given to us through persons names in Item 9 of the Schedule of the claim or

any circumstance, which could reasonably be expected to give rise to a claim

if provided in compliance with 2, above.

(Policy 13–14, ECF No. 25-2.) Applying the foregoing Policy language to the instant action, the

Seaver Action is “considered to be notified” to Ace when Abercrombie first gave notice to Ace

“of the claim [the Boundas and White Actions] or any circumstance, which could reasonably be

expected to give rise to a claim [the gift card promotion] if [Abercrombie] provided [the notice]

in compliance with 2, above.” (See id.) Again, Ace does not dispute that Abercrombie complied

with the Policy’s reporting provisions with regard to reporting the Boundas and White actions,

which, like the Seaver Action, arose from Abercrombie’s gift card promotion. Thus, under the

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Policy, the Seaver action, and “[a]ny subsequent claim arising out of” Abercrombie’s gift card

promotion, is deemed “first made and notified” during the Policy period. (See id.) 

In an attempt to bolster its interpretation of the Policy, Ace posits that to obtain coverage

for the Seaver Action, Abercrombie should have purchased the Additional Extended Reporting

Period under the Policy, asserting that it “should not suffer the consequences of Abercrombie’s

decision not to pay for an extended reporting period.” (Ace’s Mem. in Opp. 8, ECF No. 26.)

Review of the Policy’s “Extended Reporting Provisions” reveals the disingenuousness of Ace’s

argument. Contrary to Ace’s assertions, the Extended Reporting Period would not have

provided coverage for the Seaver Action. The Policy provides, in pertinent part, as follows: 

In the event of cancellation or non-renewal of this insurance by us, you shall have

the right, upon payment of an additional premium in full of the total policy premium,

to purchase a 12 month Extended Reporting Period at 100% of the total policy

premium for claims first made against you and notified to us during the Extended

Reporting Period, committed on or after the retroactive date and before the end of

the policy period, subject to the conditions set forth herein. 

(Policy 13, ECF No. 25-2 (emphasis added).) Thus, to be covered under the Extended Reporting

Period, the Seaver action had to be “first made against [Abercrombie] and notified to [Ace]

during the Extended Reporting Period.” (See id.) As set forth above, however, both the Policy’s

definition of “Claim” and its “Notice/Claims Reporting Provisions” require the conclusion that

all claims arising from Abercrombie’s gift card promotion were “first made” against

Abercrombie during the Policy period. (See id. at 7 and 13–14.) Notably, Ace does not dispute

this critical point. Thus, the Extended Reporting Period, which explicitly limits coverage to

claims “first made” during the Extended Reporting Period, would not provide coverage for any

claims arising from Abercrombie’s gift card promotion, which the Policy deems “first made”

during the Policy period. 

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In sum, Ace has failed to demonstrate that the claims Abercrombie asserts in its proposed

Supplemental Complaint are futile. The relevant Policy language is unambiguous and

consistent. The Seaver Action, and any subsequent actions arising from Abercrombie’s gift card

promotion, are considered a single claim “first made” when the Boundas Action was made,

notice of which is deemed to have been made at the time Abercrombie properly tendered written

notice of the Boundas Action. 

2. Prejudice and Undue Delay

The Court rejects Ace’s unsupported allegations of prejudice and undue delay. Beyond

restating its futility argument, Ace offers no evidence of prejudice. The allegations relating to

the Seaver Action that Abercrombie advances in its Proposed Supplemental Complaint parallel

those made in its Complaint concerning the Boundas and White Actions. Given the infancy of

this litigation, the Court cannot discern any prejudice to Ace. Ace asserts that permitting

Abercrombie to supplement its complaint “would serve only to delay resolution of the pending

motion to transfer,” but fails to explain why this is so. (Ace’s Mem. in Opp. 9, ECF No. 26.) To

the contrary, the Court finds that it would be more efficient for the Court to consider all of the

possible related issues and claims in one action. The Court, therefore, concludes that

Abercrombie may supplement its Complaint pursuant to Rule 15(d). 

III.

For the reasons set forth above, Ace’s Motion to Strike or File a Sur-Reply (ECF No. 33)

is DENIED, and Abercrombie’s Motion to File a Supplemental Complaint (ECF No. 25) is

GRANTED. Abercrombie did not sign the proposed Supplemental Complaint that it attached to

its Motion as Exhibit One. Abercrombe is, therefore, DIRECTED to file its Supplemental

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Complaint WITHIN SEVEN DAYS OF THE DATE OF THIS ORDER. 

IT IS SO ORDERED.

Date: September 19, 2012 /s/ Elizabeth A. Preston Deavers 

 Elizabeth A. Preston Deavers

 United States Magistrate Judge

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